Following the cash withdrawal policy and the naira notes redesign, the Central Bank of Nigeria said it has since recovered N1.9 trillion in cash previously held outside of the banking system.
The CBN governor, Godwin Emefiele, said this on Sunday as part of his update following a meeting with the President, Major General Muhammadu Buhari (Ret’d.), according to Nairametrics.
He noted that the apex bank has been able to make progress in achieving its goal to reduce the currency outside the banking system, which has currently dropped from N2.7 trillion to N900 billion following the new policies implemented.
In November 2022, Buhari had launched the new naira notes of the N200, N500, and N1,000 denominations, which he said are aimed at combating counterfeiting, improving the effectiveness of monetary policy tools on inflation, as well as mopping excess liquidity, particularly towards the forthcoming general elections.
In his words, Emefiele said, “Ladies and gentlemen, available data at the Central Bank of Nigeria has shown that in 2015, currency in circulation was only N1.4 trillion.”
“As of October 2022, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the banking industry and N2.7 trillion held permanently in people’s homes.”
“Ordinarily, when CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns to the CBN thereby keeping the volume of currency in circulation under the firm control of the CBN.”
“So far and since the commencement of this program, we have collected about N1.9 trillion; leaving us with about N900 billion (N500 billion + N1.9 billion).
“Nigerians in the rural areas, villages, the aged and vulnerable have had the opportunity to swap their old notes; leveraging the Agen Naira Swap initiative as well as the CBN Senior staff nationwide sensitization team exercise.”
The huge recovery of circulating currency by the central bank, will help make monetary policy more effective in taming the inflation rate.
Note that while the money supply and currency outside the banks’ vaults were still high, the CBN increased the monetary policy rate by a combined 500 basis points in 2022, which had minimal effect on the inflation rate.
However, with the continuous hawkish stance of the apex bank, and more people in the banking system, together with the reduction of the OTC withdrawal limit, monetary tools will begin to have more impact in combating the inflation rate, which is already at a nearly 17-year high.
